x
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September
30, 2016

OR

¨
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________
to ___________

Commission file number 001-35095

UNITED
COMMUNITY BANKS, INC.

(Exact name of registrant as specified in its charter)

Georgia

58-1807304

(State of Incorporation)

(I.R.S. Employer Identification No.)

125 Highway 515 East

Blairsville, Georgia

30512

Address of Principal Executive Offices

(Zip Code)

(706) 781-2265

(Telephone Number)

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES
x
NO
¨

Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).

YES
x
NO
¨

Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of
“large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.

Large accelerated filer
x

Accelerated filer
¨

Non-accelerated filer
¨
(Do not check if a smaller reporting company)

Smaller Reporting Company
¨

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act).

YES
¨
NO
x

Common stock, par value $1 per share
70,863,730 shares outstanding as of October 31, 2016.

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and accretion

22,612

16,788

(Release of) provision for credit losses

(800

)

3,400

Stock based compensation

3,257

3,343

Deferred income tax expense

45,308

28,495

Securities gains, net

(922

)

(1,877

)

Gains from sales of government guaranteed loans

(6,517

)

(4,281

)

Net gains on sale of other assets

(381

)

(437

)

Net gains and write downs on sales of other real estate owned

(59

)

(368

)

Loss on prepayment of borrowings

-

1,294

Changes in assets and liabilities:

Other assets and accrued interest receivable

(41,886

)

4,232

Accrued expenses and other liabilities

(2,753

)

4,191

Mortgage loans held for sale

(6,441

)

(5,562

)

Net cash provided by operating activities

84,853

102,588

Investing activities:

Investment securities held to maturity:

Proceeds from maturities and calls of securities held to maturity

49,968

57,721

Purchases of securities held to maturity

(20,656

)

-

Investment securities available for sale:

Proceeds from sales of securities available for sale

189,164

274,519

Proceeds from maturities and calls of securities available for sale

292,200

212,383

Purchases of securities available for sale

(308,800

)

(476,917

)

Net increase in loans

(453,541

)

(324,868

)

Funds paid to FDIC under loss sharing agreements

-

(1,198

)

Proceeds from sales of premises and equipment

5,038

2,127

Purchases of premises and equipment

(13,716

)

(7,191

)

Net cash received for acquisition

1,912

35,497

Proceeds from sale of other real estate

9,370

3,184

Net cash used in investing activities

(249,061

)

(224,743

)

Financing activities:

Net change in deposits

169,156

219,454

Net change in short-term borrowings

8,360

(16,238

)

Repayments of trust preferred securities

-

(48,521

)

Proceeds from FHLB advances

7,080,000

1,495,000

Repayments of FHLB advances

(7,074,000

)

(1,587,070

)

Proceeds from issuance of senior debt, net of issuance costs

-

84,141

Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans

270

204

Retirement of preferred stock

(9,992

)

-

Purchase of common stock

(13,659

)

-

Cash dividends on common stock

(10,085

)

(10,506

)

Cash dividends on preferred stock

(46

)

(25

)

Net cash provided by financing activities

150,004

136,439

Net change in cash and cash equivalents

(14,204

)

14,284

Cash and cash equivalents at beginning of period

240,363

192,655

Cash and cash equivalents at end of period

$

226,159

$

206,939

Supplemental disclosures of cash flow information:

Interest paid

$

25,815

$

16,567

Income taxes paid

3,431

3,453

Significant non-cash investing and financing transactions:

Unsettled government guaranteed loan sales

22,355

11,020

Unsettled purchases of securities available for sale

8,973

-

Transfers of loans to foreclosed properties

6,647

3,428

Acquisitions:

Assets acquired

450,958

1,736,203

Liabilities assumed

439,749

1,427,358

Net assets acquired

11,209

308,845

Common stock issued in acquisitions

-

214,151

Preferred stock issued in acquisitions

-

9,992

See accompanying notes to consolidated financial
statements.

7

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 – Accounting Policies

The accounting and financial reporting
policies of United Community Banks, Inc. (“United”) and its subsidiaries conform to accounting principles generally
accepted in the United States (“GAAP”) and reporting guidelines of banking regulatory authorities and regulators. The
accompanying interim consolidated financial statements have not been audited. All material intercompany balances and transactions
have been eliminated. A more detailed description of United’s accounting policies is included in its Annual Report on Form
10-K for the year ended December 31, 2015.

In management’s opinion, all accounting
adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements
have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate statement. The
results for interim periods are not necessarily indicative of results for the full year or any other interim periods.

Certain 2015 amounts have been reclassified
to conform to the 2016 presentation.

Note 2 –Accounting Standards Updates
and Recently Adopted Standards

In April 2015, the Financial Accounting
Standards Board (“FASB”) issued ASU No. 2015-03,
Interest – Imputation of Interest (Subtopic 835-30) Simplifying
the Presentation of Debt Issuance Costs
. To simplify presentation of debt issuance costs, the amendments in this update require
that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the
carrying amount of that debt liability consistent with debt discounts. The standard was effective January 1, 2016 and has
been retrospectively reflected in the accompanying consolidated balance sheet, with a corresponding reclassification for December
31, 2015 between other assets for $9.68 million, brokered deposits for $7.90 million and long-term debt for $1.78 million.

In February 2016, the FASB issued ASU No.
2016-02,
Leases (Topic 842)
. This update requires a lessee to recognize in the statement of financial position a liability
to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the
lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize
lease assets and lease liabilities. For public entities, this update is effective for fiscal years beginning after December 15,
2018, with modified retrospective application to prior periods presented. Upon adoption, United will gross up its balance sheet
by the present value of future minimum lease payments. Such payments amounted to $23.5 million at December 31, 2015.

In March 2016, the FASB issued ASU No.
2016-05,
Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships
.
This update clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument
under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting
criteria continue to be met. For public entities, this update is effective for fiscal years beginning after December 15, 2016,
with application on either a prospective or modified retrospective basis. The adoption of this update is not expected to have a
material impact on United’s consolidated financial statements.

In March 2016, the FASB issued ASU No.
2016-06,
Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments
. This update clarifies
the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments
are clearly and closely related to their debt hosts. An entity performing the assessment under this update is required to assess
the embedded call (put) options solely in accordance with a four-step decision sequence as outlined in the guidance. Consequently,
when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability
to exercise a call (put) option is related to interest rates or credit risks. For public entities, this update is effective for
fiscal years beginning after December 15, 2016, with application on a modified retrospective basis. The adoption of this update
is not expected to have a material impact on United’s consolidated financial statements.

In March 2016, the FASB issued ASU No.
2016-07,
Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of
Accounting
. This update eliminates the requirement that when an investment qualifies for use of the equity method as a result
of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations,
and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods
that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional
interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting
as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method
of accounting, no retroactive adjustment of the investment is required. For public entities, this update is effective for fiscal
years beginning after December 15, 2016, with application on a prospective basis. The adoption of this update is not expected to
have a material impact on United’s consolidated financial statements.

8

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In March 2016, the FASB issued ASU No.
2016-09,
Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
. This
update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences,
classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments require
that excess tax benefits and deficiencies be recognized as income tax expense or benefit in the income statement and as an operating
activity in the statement of cash flows. In addition, an entity can make a policy election to either estimate the number of awards
that are expected to vest or account for forfeitures as they occur. The guidance modifies the threshold to qualify for equity classification
to permit withholding up to the maximum statutory tax rate and clarifies that cash paid by an employer when directly withholding
shares for tax-withholding purposes should be classified as a financing activity. For public entities, this update is effective
for fiscal years beginning after December 15, 2016. The adoption of this update is not expected to have a material impact on United’s
consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
. The new
guidance replaces the incurred loss impairment methodology in current GAAP with an expected credit loss methodology and requires
consideration of a broader range of information to determine credit loss estimates. Financial assets measured at amortized cost
will be presented at the net amount expected to be collected by using an allowance for credit losses. Purchased credit impaired
loans will receive an allowance account at the acquisition date that represents a component of the purchase price allocation. Credit
losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses, with such allowance
limited to the amount by which fair value is below amortized cost. Application of this update will primarily be on a modified retrospective
approach, although the guidance for debt securities for which an other-than-temporary impairment has been recognized before the
effective date and for loans previously covered by ASC 310-30,
Receivables – Loans and Debt Securities Acquired with Deteriorated
Credit Quality
will be applied on a prospective basis. For public entities, this update is effective for fiscal years beginning
after December 15, 2019. United is currently evaluating the impact of this guidance on its consolidated financial statements.

In August 2016, the FASB issued ASU No.
2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
. This update provides
guidance on the treatment of eight specific cash flow issues for which there was diversity in practice. For example, cash payments
for debt prepayment should be classified as cash outflows for financing activities. Cash payments for contingent consideration
after a business combination if made soon after the acquisition date should be classified as investing outflows, while similar
payments not made soon after the acquisition date should be classified as financing outflows (up to the amount of the contingent
consideration liability recognized at the acquisition date, including measurement period adjustments) or operating activities (for
any excess). Cash proceeds from the settlement of insurance claims should be classified on the basis of the related insurance coverage,
while proceeds from the settlement of bank owned life insurance should be classified as investing inflows. For public entities,
this update is effective for fiscal years beginning after December 15, 2017. The adoption of this update is not expected to have
a material impact on United’s consolidated financial statements.

Note 3 – Acquisitions

Acquisition of Tidelands Bancshares, Inc.

On July 1, 2016, United completed the acquisition
of Tidelands Bancshares, Inc. (“Tidelands”) and its wholly-owned bank subsidiary Tidelands Bank. Tidelands operated
seven branches in coastal South Carolina. In connection with the acquisition, United acquired $440 million of assets and assumed
$440 million of liabilities. Under the terms of the merger agreement, Tidelands shareholders received cash equal to $0.52 per common
share, or an aggregate of $2.22 million. Additionally, at closing, United redeemed all of Tidelands’ fixed-rate cumulative
preferred stock that was issued to the United States Department of the Treasury (the “Treasury”) under the Treasury’s
Capital Purchase Program, plus unpaid dividends, for $8.98 million in aggregate. The fair value of consideration paid exceeded
the fair value of the identifiable assets and liabilities acquired and resulted in the establishment of goodwill in the amount
of $10.7 million, representing the intangible value of Tidelands’ business and reputation within the market it served. None
of the goodwill recognized is expected to be deductible for income tax purposes. United will amortize the related core deposit
intangible of $1.57 million using the sum-of-the-years-digits method over five years, which represents the expected useful life
of the asset.

As of the acquisition date, United assumed
long-term debt obligations with an aggregate balance of $14.4 million and an aggregate fair value of $10.8 million related to Tidelands’
outstanding trust preferred securities and paid all amounts required to bring current the payment of interest (including deferred
interest) on such trust preferred securities. The $8.25 million of debt related to Tidelands Statutory Trust I has a stated maturity
date of March 30, 2036 and a rate equal to LIBOR plus 1.38%, which resets quarterly. The $6.19 million of debt related to Tidelands
Statutory Trust II has a stated maturity date of June 30, 2038 and a rate equal to LIBOR plus 5.075%, which resets quarterly.

United’s operating results for the
period ended September 30, 2016 include the operating results of the acquired assets and assumed liabilities for the period
subsequent to the acquisition date of July 1, 2016.

9

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The purchased
assets and assumed liabilities were recorded at their acquisition date fair values and are summarized in the table below
(in
thousands)
.

As Recorded

Fair Value

As Recorded by

by Tidelands

Adjustments
(1)

United

Assets

Cash and cash equivalents

$

13,121

$

-

$

13,121

Securities

65,676

(155

)

65,521

Loans held for sale

139

3

142

Loans, net

317,938

(12,035

)

305,903

Premises and equipment, net

19,133

(7,944

)

11,189

Bank owned life insurance

16,917

-

16,917

Accrued interest receivable

1,086

(167

)

919

Net deferred tax asset

73

15,639

15,712

Core deposit intangible

-

1,570

1,570

Other real estate owned

9,881

(2,386

)

7,495

Other assets

1,920

(164

)

1,756

Total assets acquired

$

445,884

$

(5,639

)

$

440,245

Liabilities

Deposits

$

398,108

$

1,765

$

399,873

Repurchase agreements

10,000

155

10,155

Federal Home Loan Bank advances

13,000

354

13,354

Long-term debt

14,434

(3,668

)

10,766

Other liabilities

11,587

(5,986

)

5,601

Total liabilities assumed

447,129

(7,380

)

439,749

Excess of assets acquired over liabilities assumed

$

(1,245

)

Aggregate fair value adjustments

$

1,741

Total identifiable net assets

$

496

Consideration transferred

Cash paid to redeem common stock

2,224

Cash paid to redeem preferred stock issued under the Treasury's Capital Purchase Program

8,985

Total fair value of consideration transferred

11,209

Goodwill

$

10,713

(1)
Fair values are preliminary and are subject to
refinement for a period not to exceed one year after the closing date of an acquisition as information relative to closing date
fair values becomes available.

The following table presents additional
information related to the acquired loan portfolio at the acquisition date
(in thousands)
:

July 1, 2016

Accounted for pursuant to ASC 310-30:

Contractually required principal and interest

$

50,660

Non-accretable difference

13,483

Cash flows expected to be collected

37,177

Accretable yield

2,113

Fair value

$

35,064

Excluded from ASC 310-30:

Fair value

$

270,839

Gross contractual amounts receivable

302,331

Estimate of contractual cash flows not expected to be collected

3,859

10

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Acquisition of Palmetto Bancshares,
Inc.

On September 1, 2015, United completed
the acquisition of Palmetto Bancshares, Inc. (“Palmetto”) and its wholly-owned bank subsidiary The Palmetto Bank. Information
related to the fair value of assets and liabilities acquired from Palmetto is included in United’s Annual Report on Form
10-K for the year ended December 31, 2015. During second quarter 2016, within the one year measurement period, United received
additional information regarding the acquisition date fair values of premises and equipment and other real estate owned (“OREO”).
As a result the provisional values assigned to the acquired premises and equipment and OREO have been adjusted to $17.0 million
and $2.63 million, respectively, which represent a decrease of $640,000 and $497,000, respectively, from amounts previously disclosed.
The tax effect of these adjustments was reflected as an increase to the deferred tax asset of $437,000, with the net amount of
$700,000 reflected as an increase to goodwill.

Acquisition of MoneyTree Corporation

On May 1, 2015, United completed the acquisition
of MoneyTree Corporation (“MoneyTree”) and its wholly-owned bank subsidiary, First National Bank. Information related
to the fair value of assets and liabilities acquired from MoneyTree is included in United’s Annual Report on Form 10-K for
the year ended December 31, 2015.

Pro forma information

The following table discloses the impact
of the mergers with Tidelands, Palmetto and MoneyTree since their respective acquisition dates through September 30 of the year of
acquisition. The table also presents certain pro forma information as if Tidelands had been acquired on January 1, 2015 and Palmetto
and MoneyTree had been acquired on January 1, 2014. These results combine the historical results of the acquired entities with
United’s consolidated statement of income and, while adjustments were made for the estimated impact of certain fair value
adjustments and other acquisition-related activity, they are not necessarily indicative of what would have occurred had the acquisition
taken place in earlier years.

The following table presents the actual results and pro forma
information for the periods indicated
(in thousands)
. Merger-related costs of $2.93 million from the Tidelands acquisition
have been excluded from the 2016 pro forma information presented below and included in the 2015 pro forma information below. Merger-related
costs of $8.92 million from the Palmetto and MoneyTree acquisitions have been excluded from the 2015 pro forma information presented
below.

Three Months Ended September 30,

Nine Months Ended September 30,

Revenue

Net Income

Revenue

Net Income

2016

Actual Tidelands results included in statement of income since acquisition date

$

3,988

$

658

$

3,988

$

658

Supplemental consolidated pro forma as if Tidelands had been acquired January 1, 2015

105,281

27,499

305,273

72,436

2015

Actual Palmetto results included in statement of income since acquisition date

$

4,382

$

1,659

$

4,382

$

1,659

Actual MoneyTree results included in statement of income since acquisition date

3,081

1,394

5,365

1,778

Supplemental consolidated pro forma as if Tidelands had been acquired January 1, 2015 and
Palmetto and MoneyTree had been acquired January 1, 2014

United enters into reverse repurchase agreements
in order to invest short-term funds. In addition, United enters into repurchase agreements and reverse repurchase agreements with
the same counterparty in transactions commonly referred to as collateral swaps that are subject to master netting agreements under
which the balances are netted in the balance sheet in accordance with ASC 210-20,
Offsetting.

The following table presents a summary
of amounts outstanding under reverse repurchase agreements and derivative financial instruments including those entered into in
connection with the same counterparty under master netting agreements as of the dates indicated
(in thousands)
.

Gross
Amounts of

Gross
Amounts
Offset on

Gross Amounts not Offset
in the Balance Sheet

September 30, 2016

Recognized
Assets

the Balance
Sheet

Net
Asset
Balance

Financial
Instruments

Collateral
Received

Net
Amount

Repurchase agreements / reverse repurchase agreements

$

150,000

$

(150,000

)

$

-

$

-

$

-

$

-

Derivatives

25,463

-

25,463

(1,472

)

(3,307

)

20,684

Total

$

175,463

$

(150,000

)

$

25,463

$

(1,472

)

$

(3,307

)

$

20,684

Weighted average interest rate of reverse repurchase agreements

1.40

%

Gross
Amounts of

Gross
Amounts
Offset on

Net

Gross Amounts not Offset
in the Balance Sheet

Recognized
Liabilities

the Balance
Sheet

Liability
Balance

Financial
Instruments

Collateral
Pledged

Net
Amount

Repurchase agreements / reverse repurchase agreements

$

150,000

$

(150,000

)

$

-

$

-

$

-

$

-

Derivatives

32,548

-

32,548

(1,472

)

(31,960

)

-

Total

$

182,548

$

(150,000

)

$

32,548

$

(1,472

)

$

(31,960

)

$

-

Weighted average interest rate of repurchase agreements

.50

%

Gross
Amounts of

Gross
Amounts
Offset on

Gross Amounts not Offset
in the Balance Sheet

December 31, 2015

Recognized
Assets

the Balance
Sheet

Net
Asset
Balance

Financial
Instruments

Collateral
Received

Net
Amount

Repurchase agreements / reverse repurchase agreements

$

400,000

$

(400,000

)

$

-

$

-

$

-

$

-

Derivatives

20,082

-

20,082

(519

)

(3,729

)

15,834

Total

$

420,082

$

(400,000

)

$

20,082

$

(519

)

$

(3,729

)

$

15,834

Weighted average interest rate of reverse repurchase agreements

1.34

%

Gross
Amounts of

Gross
Amounts
Offset on

Net

Gross Amounts not Offset
in the Balance Sheet

Recognized
Liabilities

the Balance
Sheet

Liability
Balance

Financial
Instruments

Collateral
Pledged

Net
Amount

Repurchase agreements / reverse repurchase agreements

$

400,000

$

(400,000

)

$

-

$

-

$

-

$

-

Derivatives

28,825

-

28,825

(519

)

(30,917

)

-

Total

$

428,825

$

(400,000

)

$

28,825

$

(519

)

$

(30,917

)

$

-

Weighted average interest rate of repurchase agreements

.50

%

At September 30, 2016, United recognized
the right to reclaim cash collateral of $32.3 million and the obligation to return cash collateral of $3.31 million. At December
31, 2015, United recognized the right to reclaim cash collateral of $6.26 million and the obligation to return cash collateral
of $3.73 million. The right to reclaim cash collateral and the obligation to return cash collateral were included in the consolidated
balance sheet in other assets and other liabilities, respectively.

12

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents additional detail regarding repurchase
agreements accounted for as secured borrowings and the securities underlying these agreements as of the dates indicated
(in
thousands)
.

United is obligated to promptly transfer
additional securities if the market value of the securities falls below the repurchase agreement price. United manages
this risk by maintaining an unpledged securities portfolio that it believes is sufficient to cover a decline in the market value
of the securities sold under agreements to repurchase.

Note 5 – Securities

The amortized cost basis, unrealized gains
and losses and fair value of securities held-to-maturity as of the dates indicated are as follows
(in thousands)
.

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

As of September 30, 2016

Cost

Gains

Losses

Value

State and political subdivisions

$

57,911

$

3,545

$

61

$

61,395

Mortgage-backed securities
(1)

287,006

9,267

118

296,155

Total

$

344,917

$

12,812

$

179

$

357,550

As of December 31, 2015

State and political subdivisions

$

62,073

$

3,211

$

-

$

65,284

Mortgage-backed securities
(1)

302,623

5,424

1,673

306,374

Total

$

364,696

$

8,635

$

1,673

$

371,658

13

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The cost basis, unrealized gains and losses, and fair value
of securities available-for-sale as of the dates indicated are presented below
(in thousands)
.

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

As of September 30, 2016

Cost

Gains

Losses

Value

U.S. Treasuries

$

140,500

$

4,374

$

-

$

144,874

U.S. Government agencies

20,205

268

18

20,455

State and political subdivisions

63,001

1,885

-

64,886

Mortgage-backed securities
(1)

1,151,570

24,569

358

1,175,781

Corporate bonds

307,240

6,231

912

312,559

Asset-backed securities

495,286

2,728

2,581

495,433

Other

1,125

-

-

1,125

Total

$

2,178,927

$

40,055

$

3,869

$

2,215,113

As of December 31, 2015

U.S. Treasuries

$

169,034

$

156

$

484

$

168,706

U.S. Government agencies

112,394

385

439

112,340

State and political subdivisions

56,265

461

458

56,268

Mortgage-backed securities
(1)

1,108,206

12,077

7,165

1,113,118

Corporate bonds

308,102

933

3,009

306,026

Asset-backed securities

538,679

569

6,006

533,242

Other

1,811

-

-

1,811

Total

$

2,294,491

$

14,581

$

17,561

$

2,291,511

(1)

All are residential type mortgage-backed securities or U.S. government agency commercial mortgage backed securities.

Securities with a carrying value of $1.34
billion and $1.63 billion were pledged to secure public deposits, derivatives and other secured borrowings at September 30, 2016
and December 31, 2015, respectively.

The following table summarizes held-to-maturity
securities in an unrealized loss position as of the dates indicated (
in thousands)
.

Less than 12 Months

12 Months or More

Total

As of September 30, 2016

Fair Value

Unrealized
Loss

Fair Value

Unrealized
Loss

Fair Value

Unrealized
Loss

State and political subdivisions

$

18,332

$

61

$

-

$

-

$

18,332

$

61

Mortgage-backed securities

19,537

118

-

-

19,537

118

Total unrealized loss position

$

37,869

$

179

$

-

$

-

$

37,869

$

179

As of December 31, 2015

Mortgage-backed securities

$

140,362

$

1,331

$

13,127

$

342

$

153,489

$

1,673

Total unrealized loss position

$

140,362

$

1,331

$

13,127

$

342

$

153,489

$

1,673

14

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table summarizes available-for-sale securities
in an unrealized loss position as of the dates indicated
(in thousands)
.

Less than 12 Months

12 Months or More

Total

As of September 30, 2016

Fair Value

Unrealized
Loss

Fair Value

Unrealized
Loss

Fair Value

Unrealized
Loss

U.S. Government agencies

$

1,017

$

18

$

-

$

-

$

1,017

$

18

Mortgage-backed securities

51,399

105

50,387

253

101,786

358

Corporate bonds

54,607

393

20,481

519

75,088

912

Asset-backed securities

14,885

380

159,336

2,201

174,221

2,581

Total unrealized loss position

$

121,908

$

896

$

230,204

$

2,973

$

352,112

$

3,869

As of December 31, 2015

U.S. Treasuries

$

126,066

$

484

$

-

$

-

$

126,066

$

484

U.S. Government agencies

74,189

439

-

-

74,189

439

State and political subdivisions

27,014

458

-

-

27,014

458

Mortgage-backed securities

274,005

2,580

173,254

4,585

447,259

7,165

Corporate bonds

221,337

2,759

750

250

222,087

3,009

Asset-backed securities

358,940

5,746

4,816

260

363,756

6,006

Total unrealized loss position

$

1,081,551

$

12,466

$

178,820

$

5,095

$

1,260,371

$

17,561

At September 30, 2016, there were 53 available-for-sale
securities and seven held-to-maturity securities that were in an unrealized loss position. United does not intend to sell nor believes
it will be required to sell securities in an unrealized loss position prior to the recovery of their amortized cost basis. Unrealized
losses at September 30, 2016 were primarily attributable to changes in interest rates and spread relationships.

Management evaluates securities for other-than-temporary
impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is
given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term
prospects of the issuer, among other factors. In analyzing an issuer’s financial condition, management considers whether
the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred,
and industry analysts’ reports. No impairment charges were recognized during the three or nine months ended September 30,
2016 or 2015.

Realized gains and losses are derived using
the specific identification method for determining the cost of securities sold. The following table summarizes available-for-sale
securities sales activity for the three and nine months ended September 30, 2016 and 2015
(in thousands)
.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

2016

2015

Proceeds from sales

$

100,867

$

137,702

$

189,164

$

274,519

Gross gains on sales

$

607

$

328

$

1,565

$

1,880

Gross losses on sales

(346

)

(3

)

(643

)

(3

)

Net gains on sales of securities

$

261

$

325

$

922

$

1,877

Income tax expense attributable to sales

$

101

$

121

$

348

$

724

15

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The amortized cost and fair value of held-to-maturity
and available-for-sale securities at September 30, 2016, by contractual maturity, are presented in the following table
(in thousands)
.

Available-for-Sale

Held-to-Maturity

Amortized Cost

Fair Value

Amortized Cost

Fair Value

US Treasuries:

1 to 5 years

$

65,957

$

67,453

$

-

$

-

5 to 10 years

74,543

77,421

-

-

140,500

144,874

-

-

US Government agencies:

1 to 5 years

990

995

-

-

5 to 10 years

18,180

18,443

-

-

More than 10 years

1,035

1,017

20,205

20,455

-

-

State and political subdivisions:

Within 1 year

1,252

1,263

4,012

4,077

1 to 5 years

31,964

32,790

12,860

13,681

5 to 10 years

23,673

24,516

22,152

24,774

More than 10 years

6,112

6,317

18,887

18,863

63,001

64,886

57,911

61,395

Corporate bonds:

1 to 5 years

233,824

237,475

-

-

5 to 10 years

72,416

74,584

-

-

More than 10 years

1,000

500

-

-

307,240

312,559

-

-

Asset-backed securities:

1 to 5 years

17,250

17,459

-

-

5 to 10 years

333,434

333,831

-

-

More than 10 years

144,602

144,143

-

-

495,286

495,433

-

-

Other:

More than 10 years

1,125

1,125

-

-

1,125

1,125

-

-

Total securities other than mortgage-backed securities:

Within 1 year

1,252

1,263

4,012

4,077

1 to 5 years

349,985

356,172

12,860

13,681

5 to 10 years

522,246

528,795

22,152

24,774

More than 10 years

153,874

153,102

18,887

18,863

Mortgage-backed securities

1,151,570

1,175,781

287,006

296,155

$

2,178,927

$

2,215,113

$

344,917

$

357,550

Expected maturities may differ from contractual
maturities because issuers and borrowers may have the right to call or prepay obligations.

16

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 6 – Loans and Allowance for Credit Losses

Major classifications of loans are summarized
as of the dates indicated as follows
(in thousands)
.

September 30,

December 31,

2016

2015

Owner occupied commercial real estate

$

1,512,185

$

1,493,966

Income producing commercial real estate

1,105,293

823,729

Commercial & industrial

994,350

785,417

Commercial construction

388,861

342,078

Total commercial

4,000,689

3,445,190

Residential mortgage

1,055,166

1,029,663

Home equity lines of credit

698,356

597,806

Residential construction

378,329

351,700

Consumer installment

126,468

115,111

Indirect auto

466,102

455,971

Total loans

6,725,110

5,995,441

Less allowance for loan losses

(62,961

)

(68,448

)

Loans, net

$

6,662,149

$

5,926,993

At September 30, 2016 and December 31,
2015, loans totaling $3.05 billion and $2.44 billion, respectively, were pledged as collateral to secure Federal Home Loan Bank
advances and other contingent funding sources.

At September 30, 2016, the carrying value
and outstanding balance of purchased credit impaired (“PCI”) loans accounted for under ASC 310-30,
Loans and Debt
Securities Acquired with Deteriorated Credit Quality
, were $67.5 million and $95.3 million, respectively. At December 31, 2015,
the carrying value and outstanding balance of PCI loans were $51.3 million and $71.0 million, respectively. The following table
presents changes in the value of the accretable yield for PCI loans for the periods indicated
(in thousands)
:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2016

2015

2016

2015

Balance at beginning of period

$

5,337

$

946

$

4,279

$

-

Additions due to acquisitions

2,113

4,834

2,113

5,863

Accretion

(1,116

)

(316

)

(3,058

)

(399

)

Reclassification from nonaccretable difference

1,455

-

2,908

-

Changes in expected cash flows that do not affect nonaccretable difference

362

-

1,909

-

Balance at end of period

$

8,151

$

5,464

$

8,151

$

5,464

In addition to the accretable yield on
PCI loans, the fair value adjustments on purchased loans outside the scope of ASC 310-30 are also accreted to interest revenue
over the life of the loans. At September 30, 2016 and December 31, 2015, the remaining accretable fair value marks on loans acquired
through a business combination and not accounted for under ASC 310-30 were $8.30 million and $7.03 million, respectively. In addition,
indirect auto loans purchased at a premium outside of a business combination have a remaining premium of $11.8 million and $12.0
million, respectively, as of September 30, 2016 and December 31, 2015.

The allowance for loan losses represents
management’s estimate of probable incurred losses in the loan portfolio as of the end of the period. The allowance for unfunded
commitments is included in other liabilities in the consolidated balance sheet. Combined, the allowance for loan losses and allowance
for unfunded commitments are referred to as the allowance for credit losses.

17

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents the balance
and activity in the allowance for credit losses by portfolio segment for the periods indicated
(in thousands)
.

2016

2015

Three Months
Ended September 30,

Beginning
Balance

Charge-
Offs

Recoveries

(Release)
Provision

Ending
Balance

Beginning
Balance

Charge-
Offs

Recoveries

(Release)
Provision

Ending
Balance

Owner occupied commercial real estate

$

14,432

$

(276

)

$

108

$

(207

)

$

14,057

$

16,339

$

(463

)

$

228

$

(495

)

$

15,609

Income producing commercial real estate

5,522

(201

)

44

1,587

6,952

8,200

(126

)

231

(532

)

7,773

Commercial & industrial

3,207

(850

)

398

689

3,444

4,728

(508

)

319

1,041

5,580

Commercial construction

8,938

(14

)

100

350

9,374

4,895

(80

)

21

1,659

6,495

Residential mortgage

15,662

(253

)

508

(179

)

15,738

19,052

(848

)

415

(1,880

)

16,739

Home equity lines of credit

5,318

(321

)

54

191

5,242

5,479

(413

)

120

1,119

6,305

Residential construction

9,005

(269

)

134

(2,990

)

5,880

9,337

(50

)

174

(1,078

)

8,383

Consumer installment

723

(426

)

190

183

670

688

(496

)

221

352

765

Indirect auto

1,446

(354

)

69

443

1,604

1,411

(175

)

13

164

1,413

Total allowance for loan losses

64,253

(2,964

)

1,605

67

62,961

70,129

(3,159

)

1,742

350

69,062

Allowance for unfunded commitments

2,369

-

-

(367

)

2,002

2,580

-

-

350

2,930

Total allowance for credit
losses

$

66,622

$

(2,964

)

$

1,605

$

(300

)

$

64,963

$

72,709

$

(3,159

)

$

1,742

$

700

$

71,992

Nine Months Ended September 30,

Beginning
Balance

Charge-
Offs

Recoveries

(Release)
Provision

Ending
Balance

Beginning
Balance

Charge-
Offs

Recoveries

(Release)
Provision

Ending
Balance

Owner occupied commercial real estate

$

16,732

$

(1,288

)

$

251

$

(1,638

)

$

14,057

$

16,041

$

(1,194

)

$

317

$

445

$

15,609

Income producing commercial real estate

8,235

(544

)

199

(938

)

6,952

10,296

(448

)

588

(2,663

)

7,773

Commercial & industrial

4,442

(1,645

)

1,302

(655

)

3,444

3,255

(1,139

)

1,236

2,228

5,580

Commercial construction

5,583

(325

)

102

4,014

9,374

4,747

(249

)

72

1,925

6,495

Residential mortgage

17,232

(1,489

)

866

(871

)

15,738

20,311

(2,535

)

899

(1,936

)

16,739

Home equity lines of credit

6,042

(1,513

)

361

352

5,242

4,574

(834

)

160

2,405

6,305

Residential construction

7,961

(598

)

575

(2,058

)

5,880

10,603

(1,689

)

645

(1,176

)

8,383

Consumer installment

828

(1,295

)

625

512

670

731

(1,171

)

784

421

765

Indirect auto

1,393

(953

)

142

1,022

1,604

1,061

(433

)

34

751

1,413

Total allowance for loan losses

68,448

(9,650

)

4,423

(260

)

62,961

71,619

(9,692

)

4,735

2,400

69,062

Allowance for unfunded commitments

2,542

-

-

(540

)

2,002

1,930

-

-

1,000

2,930

Total allowance for credit
losses

$

70,990

$

(9,650

)

$

4,423

$

(800

)

$

64,963

$

73,549

$

(9,692

)

$

4,735

$

3,400

$

71,992

18

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table represents the recorded investment in loans
by portfolio segment and the balance of the allowance for loan losses assigned to each segment based on the method of evaluating
the loans for impairment as of the dates indicated
(in thousands)
.

Allowance
for Loan Losses

September
30, 2016

December
31, 2015

Individually

evaluated
for
impairment

Collectively
evaluated for
impairment

PCI

Ending
Balance

Individually
evaluated
for
impairment

Collectively
evaluated for
impairment

PCI

Ending
Balance

Owner occupied commercial real estate

$

1,212

$

12,845

$

-

$

14,057

$

1,465

$

15,267

$

-

$

16,732

Income producing commercial real estate

714

6,238

-

6,952

961

7,274

-

8,235

Commercial & industrial

64

3,380

-

3,444

280

4,162

-

4,442

Commercial construction

42

9,303

29

9,374

13

5,570

-

5,583

Residential mortgage

3,613

12,124

1

15,738

3,885

13,347

-

17,232

Home equity lines of credit

3

5,231

8

5,242

6

6,036

-

6,042

Residential construction

139

5,736

5

5,880

174

7,787

-

7,961

Consumer installment

9

661

-

670

13

815

-

828

Indirect auto

-

1,604

-

1,604

-

1,393

-

1,393

Total allowance for loan losses

5,796

57,122

43

62,961

6,797

61,651

-

68,448

Allowance for unfunded commitments

-

2,002

-

2,002

-

2,542

-

2,542

Total allowance for credit
losses

$

5,796

$

59,124

$

43

$

64,963

$

6,797

$

64,193

$

-

$

70,990

Loans Outstanding

September 30, 2016

December 31, 2015

Individually
evaluated
for
impairment

Collectively
evaluated for
impairment

PCI

Ending
Balance

Individually
evaluated
for
impairment

Collectively
evaluated for
impairment

PCI

Ending
Balance

Owner occupied commercial real estate

$

34,319

$

1,459,218

$

18,648

$

1,512,185

$

38,268

$

1,442,024

$

13,674

$

1,493,966

Income producing commercial real estate

28,418

1,052,242

24,633

1,105,293

23,013

772,945

27,771

823,729

Commercial & industrial

2,515

990,788

1,047

994,350

3,339

781,423

655

785,417

Commercial construction

1,383

382,283

5,195

388,861

10,616

329,320

2,142

342,078

Residential mortgage

19,586

1,029,629

5,951

1,055,166

19,627

1,005,860

4,176

1,029,663

Home equity lines of credit

103

690,865

7,388

698,356

167

595,951

1,688

597,806

Residential construction

5,925

367,900

4,504

378,329

7,900

342,677

1,123

351,700

Consumer installment

285

126,012

171

126,468

329

114,741

41

115,111

Indirect auto

1,022

465,072

8

466,102

749

455,173

49

455,971

Total loans

$

93,556

$

6,564,009

$

67,545

$

6,725,110

$

104,008

$

5,840,114

$

51,319

$

5,995,441

Excluding loans accounted for under ASC
310-30, management individually evaluates all loans that are on nonaccrual with a balance of $500,000 or greater and all troubled
debt restructurings (“TDRs”) for impairment. In addition, management reviews all accruing substandard loans greater
than $2 million to determine if the loan is impaired. A loan is considered impaired when, based on current events and circumstances,
it is probable that all amounts due according to the original contractual terms of the loan will not be collected. All TDRs are
considered impaired regardless of accrual status. Impairment is measured based on the present value of expected future cash flows,
discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral
if the loan is collateral dependent. A specific reserve is established for impaired loans for the amount of calculated impairment.
Interest payments received on impaired nonaccrual loans are applied as a reduction of the recorded investment in the loan. For
impaired loans not on nonaccrual status, interest is accrued according to the terms of the loan agreement. Loans are evaluated
for impairment quarterly and specific reserves are established in the allowance for loan losses for any measured impairment.

Each quarter, management prepares an analysis
of the allowance for credit losses to determine the appropriate balance that measures and quantifies the amount of probable incurred
losses in the loan portfolio and unfunded loan commitments. The allowance is comprised of specific reserves on individually impaired
loans, which are determined as described above, and general reserves which are determined based on historical loss experience as
adjusted for current trends and economic conditions multiplied by a loss emergence period factor. Management had previously used
eight quarters of historical loss experience look-back period to determine the loss factors to be used in the reserve calculation
for loans evaluated in the aggregate. Beginning in the third quarter of 2016, management extended the look-back period to 17 quarters
to better capture the full range of the loss cycle balanced with the availability of reliable historical data. The look-back period
will be extended by one quarter each quarter going forward. Management weights each quarter in the look-back period equally to
capture the full range of the cycle. Management believes the weightings are appropriate to measure the probable losses incurred
within the loan portfolio.

Management calculates the loss emergence
period for each pool of loans based on the weighted average length of time between the date a loan first exceeds 30 days past due
and the date the loan is charged off.

19

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

On junior lien home equity loans, management
has limited ability to monitor the delinquency status of the first lien unless the first lien is also held by United. As a result,
management applies the weighted average historical loss factor for this category and appropriately adjusts it to reflect the increased
risk of loss from these credits.

Management carefully reviews the resulting
loss factors for each category of the loan portfolio and evaluates whether qualitative adjustments are necessary to take into consideration
recent credit trends such as increases or decreases in past due, nonaccrual, criticized and classified loans, and other macro environmental
factors such as changes in unemployment rates, lease vacancy rates and trends in property values and absorption rates.

Management believes that its method of
determining the balance of the allowance for credit losses provides a reasonable and reliable basis for measuring and reporting
losses that are incurred in the loan portfolio as of the reporting date.

When a loan officer determines that a loan
is uncollectible, he or she is responsible for recommending that the loan be placed on nonaccrual status and charged off. Full
or partial charge-offs may also be recommended by the Collections Department, the Special Assets Department, the Loss Mitigation
Department and the Foreclosure/OREO Department. Nonaccrual real estate loans are generally charged down to fair value less costs
to sell at the time they are placed on nonaccrual status.

Generally, closed-end retail loans (installment
and residential mortgage loans) past due 90 cumulative days are written down to their collateral value less estimated selling costs.
Open-end (revolving) unsecured retail loans which are past due 90 cumulative days from their contractual due date are generally
charged-off.

The following table presents loans individually
evaluated for impairment by class of loans as of the dates indicated
(in thousands)
.

September 30, 2016

December 31, 2015

Unpaid
Principal
Balance

Recorded
Investment

Allowance
for Loan

Losses
Allocated

Unpaid
Principal
Balance

Recorded
Investment

Allowance
for Loan

Losses
Allocated

With no related allowance recorded:

Owner occupied commercial real estate

$

13,030

$

12,892

$

-

$

14,793

$

14,460

$

-

Income producing commercial real estate

17,144

16,963

-

13,044

12,827

-

Commercial & industrial

473

473

-

493

469

-

Commercial construction

-

-

-

-

-

-

Total commercial

30,647

30,328

-

28,330

27,756

-

Residential mortgage

692

689

-

791

791

-

Home equity lines of credit

-

-

-

-

-

-

Residential construction

1,439

1,388

-

3,731

3,429

-

Consumer installment

-

-

-

-

-

-

Indirect auto

1,022

1,022

-

749

749

-

Total with no related allowance recorded

33,800

33,427

-

33,601

32,725

-

With an allowance recorded:

Owner occupied commercial real estate

22,096

21,427

1,212

24,043

23,808

1,465

Income producing commercial real estate

11,503

11,455

714

10,281

10,186

961

Commercial & industrial

2,218

2,042

64

2,957

2,870

280

Commercial construction

1,478

1,383

42

10,787

10,616

13

Total commercial

37,295

36,307

2,032

48,068

47,480

2,719

Residential mortgage

19,426

18,897

3,613

19,346

18,836

3,885

Home equity lines of credit

103

103

3

167

167

6

Residential construction

5,209

4,537

139

4,854

4,471

174

Consumer installment

314

285

9

354

329

13

Indirect auto

-

-

-

-

-

-

Total with an allowance recorded

62,347

60,129

5,796

72,789

71,283

6,797

Total

$

96,147

$

93,556

$

5,796

$

106,390

$

104,008

$

6,797

Excluding PCI loans, there were no loans
more than 90 days past due and still accruing interest at September 30, 2016 or December 31, 2015. Nonaccrual loans include both
homogeneous loans that are collectively evaluated for impairment and individually evaluated impaired loans. United’s policy
is to place loans on nonaccrual status when, in the opinion of management, the principal and interest on a loan is not likely to
be repaid in full or when the loan becomes 90 days past due and is not well secured and in the process of collection. When a loan
is classified on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue.
Principal and interest payments received on a nonaccrual loan are applied to reduce the loan’s recorded investment.

20

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

PCI loans are considered past due or delinquent
when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due
date of the scheduled payment. However, these loans are considered to be performing, even though they may be contractually past
due, as any non-payment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows
and is included in the resulting recognition of current period covered loan loss provision or future period yield adjustments.
The accrual of interest is discontinued on PCI loans if management can no longer reliably estimate future cash flows on the loan.
No PCI loans were classified as nonaccrual at September 30, 2016 or December 31, 2015 as the carrying value of the respective loan
or pool of loans cash flows were considered estimable and probable of collection. Therefore, interest revenue, through accretion
of the difference between the carrying value of the loans and the expected cash flows, is being recognized on all PCI loans.

The gross additional interest revenue that
would have been earned if the loans classified as nonaccrual had performed in accordance with the original terms was approximately
$262,000 for the three months ended September 30, 2016 and 2015 and $686,000 for the nine months ended September 30, 2016 and 2015.

The average balances of impaired loans
and income recognized on impaired loans while they were considered impaired are presented below for the periods indicated
(in
thousands)
.

2016

2015

Three Months Ended September 30,

Average
Balance

Interest
Revenue
Recognized
During
Impairment

Cash Basis
Interest
Revenue
Received

Average
Balance

Interest
Revenue
Recognized
During
Impairment

Cash Basis
Interest
Revenue
Received

Owner occupied commercial real estate

$

33,387

$

414

$

414

$

37,840

$

484

$

523

Income producing commercial real estate

28,487

375

343

20,802

265

281

Commercial & industrial

2,553

33

33

4,637

43

77

Commercial construction

1,411

26

26

12,584

116

116

Total commercial

65,838

848

816

75,863

908

997

Residential mortgage

19,653

201

196

23,176

242

197

Home equity lines of credit

103

1

1

477

5

5

Residential construction

6,115

59

60

8,560

123

123

Consumer installment

291

5

6

242

5

4

Indirect auto

959

11

11

-

-

-

Total

$

92,959

$

1,125

$

1,090

$

108,318

$

1,283

$

1,326

Nine Months Ended September 30,

Owner occupied commercial real estate

$

31,648

$

1,223

$

1,249

$

37,605

$

1,413

$

1,491

Income producing commercial real estate

28,726

943

940

21,427

805

810

Commercial & industrial

2,614

99

95

4,627

126

202

Commercial construction

1,462

70

70

12,340

349

353

Total commercial

64,450

2,335

2,354

75,999

2,693

2,856

Residential mortgage

19,860

670

664

21,955

667

633

Home equity lines of credit

103

3

3

504

15

15

Residential construction

6,372

197

203

9,294

371

381

Consumer installment

303

17

18

185

11

10

Indirect auto

871

33

33

-

-

-

Total

$

91,959

$

3,255

$

3,275

$

107,937

$

3,757

$

3,895

21

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents the recorded
investment in nonaccrual loans by loan class as of the dates indicated
(in thousands)
.

September 30,

December 31,

2016

2015

Owner occupied commercial real estate

$

6,454

$

7,036

Income producing commercial real estate

949

2,595

Commercial & industrial

1,079

892

Commercial construction

98

328

Total commercial

8,580

10,851

Residential mortgage

8,152

8,555

Home equity lines of credit

1,194

851

Residential construction

2,248

1,398

Consumer installment

98

175

Indirect auto

1,300

823

Total

$

21,572

$

22,653

The following table presents the aging
of the recorded investment in past due loans by class of loans as of the dates indicated
(in thousands)
.

Loans Past Due

Loans Not

As of September 30, 2016

30 - 59 Days

60 - 89 Days

> 90 Days

Total

Past Due

PCI Loans

Total

Owner occupied commercial real estate

$

2,975

$

1,279

$

2,291

$

6,545

$

1,486,992

$

18,648

$

1,512,185

Income producing commercial real estate

667

-

180

847

1,079,813

24,633

1,105,293

Commercial & industrial

678

681

475

1,834

991,469

1,047

994,350

Commercial construction

365

-

-

365

383,301

5,195

388,861

Total commercial

4,685

1,960

2,946

9,591

3,941,575

49,523

4,000,689

Residential mortgage

6,644

1,981

2,477

11,102

1,038,113

5,951

1,055,166

Home equity lines of credit

1,743

474

452

2,669

688,299

7,388

698,356

Residential construction

991

1,111

859

2,961

370,864

4,504

378,329

Consumer installment

648

43

8

699

125,598

171

126,468

Indirect auto

853

539

795

2,187

463,907

8

466,102

Total loans

$

15,564

$

6,108

$

7,537

$

29,209

$

6,628,356

$

67,545

$

6,725,110

As of December 31, 2015

Owner occupied commercial real estate

$

3,733

$

1,686

$

1,400

$

6,819

$

1,473,473

$

13,674

$

1,493,966

Income producing commercial real estate

204

1,030

621

1,855

794,103

27,771

823,729

Commercial & industrial

858

88

489

1,435

783,327

655

785,417

Commercial construction

159

-

76

235

339,701

2,142

342,078

Total commercial

4,954

2,804

2,586

10,344

3,390,604

44,242

3,445,190

Residential mortgage

5,111

1,338

3,544

9,993

1,015,494

4,176

1,029,663

Home equity lines of credit

1,118

188

287

1,593

594,525

1,688

597,806

Residential construction

2,180

239

344

2,763

347,814

1,123

351,700

Consumer installment

610

115

83

808

114,262

41

115,111

Indirect auto

611

311

561

1,483

454,439

49

455,971

Total loans

$

14,584

$

4,995

$

7,405

$

26,984

$

5,917,138

$

51,319

$

5,995,441

As of September 30, 2016 and December 31,
2015, $5.18 million and $6.37 million, respectively, of specific reserves were allocated to customers whose loan terms have been
modified in TDRs. United committed to lend additional amounts totaling up to $55,000 and $224,000 as of September 30, 2016 and
December 31, 2015, respectively, to customers with outstanding loans that are classified as TDRs.

The modification of the terms of the TDRs
included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the amortization
period that would not otherwise be considered in the current market for new debt with similar risk characteristics; a restructuring
of the borrower’s debt into an “A/B note structure” where the A note would fall within the borrower’s ability
to pay and the remainder would be included in the B note; a mandated bankruptcy restructuring; or interest-only payment terms greater
than 90 days where the borrower is unable to amortize the loan. Modified PCI loans are not accounted for as TDRs because they are
not separated from the pools, and as such are not classified as impaired loans.

22

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents information
on TDRs, including the number of loan contracts restructured and the pre- and post-modification recorded investment as of the dates
indicated
(dollars in thousands)
.

September 30, 2016

December 31, 2015

Number of
Contracts

Pre-
Modification
Outstanding
Recorded
Investment

Post-
Modification
Outstanding
Recorded
Investment

Number of
Contracts

Pre-
Modification
Outstanding
Recorded
Investment

Post-
Modification
Outstanding
Recorded
Investment

Owner occupied commercial real estate

54

$

26,050

$

25,560

54

$

32,544

$

32,058

Income producing commercial real estate

31

21,012

21,012

29

15,703

15,629

Commercial & industrial

20

1,961

1,882

26

2,955

2,870

Commercial construction

8

1,463

1,383

14

10,785

10,616

Total commercial

113

50,486

49,837

123

61,987

61,173

Residential mortgage

171

19,036

18,768

173

19,101

18,836

Home equity lines of credit

2

103

103

2

167

167

Residential construction

48

5,971

5,381

44

5,663

5,334

Consumer installment

19

306

285

22

348

329

Indirect auto

61

1,022

1,022

49

749

749

Total loans

414

$

76,924

$

75,396

413

$

88,015

$

86,588

Loans modified under the terms of a TDR
during the three and nine months ended September 30, 2016 and 2015 are presented in the table below. In addition, the following
table presents loans modified under the terms of a TDR that defaulted (became 90 days or more delinquent) during the periods presented
and were initially restructured within one year prior to default
(dollars in thousands)
.

New TDRs for the Three Months Ended September 30,

New TDRs for the Nine Months Ended September 30,

Pre-
Modification
Outstanding

Post-
Modification
Outstanding

Modified Within the
Previous Twelve Months
That Have Subsequently
Defaulted during the
Three Months Ended
September 30,

Pre-
Modification
Outstanding

Post-
Modification
Outstanding

Modified Within the
Previous Twelve
Months That Have
Subsequently Defaulted
during the Nine Months
Ended September 30,